The government has disbursed Tk4,100 crore to help four state-owned commercial banks to make up their capital shortfall created mainly due to large credit scams that surfaced one and half year ago.
The beneficiaries – Sonali, Janata, Agrani and Rupali banks will, however, have to comply with five conditions like automation of the banking system.
The Budget Division of the Ministry of Finance issued four separate letters to the banks yesterday, apprising them of the fund disbursement.
Sonali Bank to get Tk1,995 crore, Janata Bank Tk814 crore, Agrani Bank Tk1,081 crore and Rupali Bank Tk210 crore.
Economists and bankers said the government is providing the banks from the people’s money to make up the shortfall that created due to the scams by Hall-Mark and Bismillah groups in connivance with a section of bankers.
“The amount was released from the budgetary allocation as an equity capital in accordance with a condition imposed by the International Monetary Fund (IMF) under its Extended Credit Facility,” said a senior official.
He said it is not a policy decision by the all party interim government because the move does not influence the voters and general election scheduled to be held on January 5.
On September 30 this year, the cumulative capital shortfall of the four banks stood at Tk8,863 crore, an increase of over 300% from December 31 last, according to Bangladesh Bank statistics.
Capital shortfall of Sonali Bank stood at Tk4,639 crore, Janata Bank Tk1,574 crore, Agani Bank Tk2,481 crore and Rupali Bank Tk170 crore.
Former adviser to the past caretaker government Dr Mirza Azizul Islam said the all-party government has taken several policy decisions, including recapitalisation of the banks, which would influence the voters indirectly.
“The people’s money should not be disbursed without ensuring its proper utilisation,” he said.
He, however, added that the government has no alternative to provide the banks with the fund as the banks are at risk to become bankrupt.
According to the refinance conditions, the management of the four commercial banks should follow the traditional financial rules of the country and the fund should not be spent on other purposes like revenue expenditure.
The managements should use the fund only on capital expenditure, especially automation of the banks. Draft policies for automation should be submitted to Bangladesh Bank within January 15 next year.
The banks will also have to inform the Banking and Financial Institutions Division about how the fund would be utilised.
In August, Finance Minister AMA Muhith lambasted the management and executives of the state-owned banks for losing even their capital due to poor management.
Banking Secretary Dr M Aslam Alam told the Dhaka Tribune a committee of banking division and Bangladesh Bank would monitor utilisation of the fund.
– See more at: http://www.dhakatribune.com/banks/2013/dec/27/tk4100cr-released-recapitalize#sthash.UmBarUCN.dpuf
The government has disbursed Tk4,100 crore to help four state-owned commercial banks to make up their capital shortfall created mainly due to large credit scams that surfaced one and half year ago.
The beneficiaries – Sonali, Janata, Agrani and Rupali banks will, however, have to comply with five conditions like automation of the banking system.
The Budget Division of the Ministry of Finance issued four separate letters to the banks yesterday, apprising them of the fund disbursement.
Sonali Bank to get Tk1,995 crore, Janata Bank Tk814 crore, Agrani Bank Tk1,081 crore and Rupali Bank Tk210 crore.
Economists and bankers said the government is providing the banks from the people’s money to make up the shortfall that created due to the scams by Hall-Mark and Bismillah groups in connivance with a section of bankers.
“The amount was released from the budgetary allocation as an equity capital in accordance with a condition imposed by the International Monetary Fund (IMF) under its Extended Credit Facility,” said a senior official.
He said it is not a policy decision by the all party interim government because the move does not influence the voters and general election scheduled to be held on January 5.
On September 30 this year, the cumulative capital shortfall of the four banks stood at Tk8,863 crore, an increase of over 300% from December 31 last, according to Bangladesh Bank statistics.
Capital shortfall of Sonali Bank stood at Tk4,639 crore, Janata Bank Tk1,574 crore, Agani Bank Tk2,481 crore and Rupali Bank Tk170 crore.
Former adviser to the past caretaker government Dr Mirza Azizul Islam said the all-party government has taken several policy decisions, including recapitalisation of the banks, which would influence the voters indirectly.
“The people’s money should not be disbursed without ensuring its proper utilisation,” he said.
He, however, added that the government has no alternative to provide the banks with the fund as the banks are at risk to become bankrupt.
According to the refinance conditions, the management of the four commercial banks should follow the traditional financial rules of the country and the fund should not be spent on other purposes like revenue expenditure.
The managements should use the fund only on capital expenditure, especially automation of the banks. Draft policies for automation should be submitted to Bangladesh Bank within January 15 next year.
The banks will also have to inform the Banking and Financial Institutions Division about how the fund would be utilised.
In August, Finance Minister AMA Muhith lambasted the management and executives of the state-owned banks for losing even their capital due to poor management.
Banking Secretary Dr M Aslam Alam told the Dhaka Tribune a committee of banking division and Bangladesh Bank would monitor utilisation of the fund.
Source: Dhaka Tribune
